In the ever-changing global business environment, supply chain management has become a complex dance of coordination, efficiency, and adaptability. As we move our way through 2023, businesses may face a series of risks that could disrupt their supply chains. The way these risks are managed can be crucial to success.
In this blog, we will explore strategies to manage and mitigate risks in your supply chain this year.
- Diversify Supplier Base: Over-reliance on one supplier can be a recipe for disaster. Consider diversifying your sales force to different regions and countries. This helps mitigate the effects of domestic disturbances such as natural disasters, political unrest, or regulatory changes. Leverage technology and data analytics to identify other vendors who meet your quality standards and can step in if your primary supplier encounters issues.
"It's important to note that whilst supplier diversification might result in reduced bargaining power, there could be reduced logistics costs associated with different suppliers because of their location. So overall there could be a saving. "
Jade Blackburn, Head of Sales - WTA
- Real-Time Visibility: Invest in advanced supply chain visibility tools that allow real-time tracking and monitoring. These tools can provide insight into every aspect of your supply chain, alerting you to potential schedule delays or bottlenecks. With accurate and up-to-date information, you can quickly make informed decisions and proactively address any issues that arise.
- Data Analytics and AI: Use data analytics and artificial intelligence to predict potential risks. This technology can predict potential crisis by analysing historical data, market data, and even external factors such as weather and geopolitical data. By identifying patterns and relationships, you can develop prevention strategies and contingency plans. Any supply chain visibility tool worth its salt should be using data analytics and AI.
- Collaborative Relationships: Build strong, collaborative relationships with suppliers, partners, and even competitors. Open communication can facilitate the exchange of information about potential risks and challenges. By working together, you can share insights and jointly develop strategies to reduce shared risks. An effective way to achieve this is through attending industry events. Nothing beats making a connection in person.
"More visibility is desirable, because it increases efficiency in a supply chain and decreases both cost and risk."
S. Nooraie, M. Parast, International Journal of
Production Economics (2015).
- Scenario management: Embrace scenario planning to prepare for potential problems. Create "what if" scenarios based on risks such as supply shortages, transportation problems, or sudden increases in demand. This proactive approach allows you to establish predetermined procedures, reducing the time you have to react to a crisis. In the cut and thrust of managing a supply chain, it can be easy to overlook this step, but try to allow time for this kind of analysis.
- Consistent Practices: Environmental and social hazards have received increasing attention in recent years. Adopting sustainable practices not only contributes to a better world but also reduces certain risks. By focusing on environmentally friendly sourcing, fair employee practices, and responsible waste management, you can avoid potential backlash, regulatory fines, and reputational damage.
- Flexible Stock Management: Maintaining inventory that is too lean can save costs but can leave you vulnerable to harassment. Striking a balance between reducing storage costs and buffer stock can help weather sudden increases in demand or supply disruption.
- Continuous R&D: Supply chain risks are complex and constantly evolving. Establishing a culture of continuous maintenance and improvement in your organisation. Review and update your risk management policies regularly to keep up with the changing business environment.
- Economics of supply chain: Look for innovative financing solutions designed to improve supply chain resilience. Supply chain financing can help close payment gaps, ensuring that suppliers are paid faster even when cash flow is tight. This can create a positive attitude and encourage suppliers to prioritise orders. But be careful this doesn't jeopardise relationships, as discussed in point 4.
- Regulatory and Compliance Preparations: Familiarise yourself with the laws and regulations in your area of practice. Anticipate changes and potential legal challenges that could disrupt your supply chain. Having ready-made legal experts can help overcome unexpected legal hurdles.
In today’s complex supply chain, risk management is not just a strategy, it's a necessity. By diversifying suppliers, embracing technology and managing relationships, businesses can reduce the impact of crises and help to ensure smooth operations.
Knowing where your goods are at any given time is imperative when current supply chains are not what they used to be before the COVID-19 pandemic. Disruption in the supply chain seems to be the new norm, but it doesn't have to be.
With more insight into your supply chain, disruptions can be minimised. At WTA, we can track your shipment from vessel or aircraft and keep you updated every step of the way until your goods arrive where they need to be on-time.
